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8

UNBREAKABLE

RULES FOR

BUSINESS START-UP

SUCCESS WORKBOOK

by Sean C. Castrina 1


Table of Contents 1 - YOU MUST BE QUALIFIED .................................................................2 It’s Not Just About The Money ...........................................................................................2 Understand The Risk .........................................................................................................3 Entrepreneurs Think Differently ..........................................................................................4 Can You Make Profitability Your Passion? ..........................................................................5 Are You A Self-Starter? ......................................................................................................6 How Strong Is Your Success Instinct? ...............................................................................7 You Don’t Need An Advanced Degree ...............................................................................8 Strong Work Ethic .............................................................................................................8 Are You A Problem Solver? ................................................................................................9 Are You An Effective Time And Priority Manager? ............................................................10 Are You An “Industry Expert?” .........................................................................................12 Great People Skills Can Make The Difference ..................................................................13 You May Be A Team Of One ............................................................................................14 Excel At The Right Business ............................................................................................15 Characteristics Of Those With High Probability Of Failure .................................................16 Define Your Own Success Standard ................................................................................17 “Never Give Up” ..............................................................................................................18

2 - YOUR BUSINESS IDEA MUST BE QUALIFIED ..................................20 Conduct Basic Market Research .....................................................................................20 Keep Your Business Model Simple ..................................................................................21 Fill A Need Or Meet A Desire ...........................................................................................21 Focus On Durable Goods And Services ..........................................................................22 Unique Selling Proposition ...............................................................................................23 Model A Franchise ...........................................................................................................24 Consider A Franchise ......................................................................................................24 Start A Business — Or Purchase One .............................................................................25 Buy The Company You Work For .....................................................................................26 Review Your Idea Thoroughly ...........................................................................................27 Don’t Quit Your Day Job ..................................................................................................27

3 - PLAN FOR SUCCESS ......................................................................28 Don’t Count On Venture Capital .......................................................................................28 Obtain Competitive Intelligence .......................................................................................29 Obtain Baseline Pricing ....................................................................................................30 2


Define Your Competitive Advantage .................................................................................31 Mission Statement ...........................................................................................................32 Vision Statement .............................................................................................................33 Value Statement ..............................................................................................................33 Create A Business Plan ...................................................................................................35 Make An Exhaustive List Of Pre-Launch Tasks ................................................................38 Consider The Best Launch Season ..................................................................................39 Adapt To Changing Circumstances .................................................................................40

4 - PROTECT YOURSELF AND YOUR BUSINESS .................................41 Purchase Insurance .........................................................................................................42 Protect Your Intellectual Property .....................................................................................43 If You Partner, Consider These Rules ...............................................................................43 Establish The Proper Legal Framework ............................................................................44 Know All Applicable Labor Laws ......................................................................................45

5 - BUILD A SUCCESSFUL TEAM .........................................................46 Qualify Your Labor Market ................................................................................................46 Try To Hire The Best, Regardless .....................................................................................47 There Are Mechanics To Hiring ........................................................................................48 Approach Staffing Strategically ........................................................................................49 If You Don’t Have The Skills, Partner ................................................................................50 Lead Like A Coach ..........................................................................................................51 Maximize The Talent Of Your Employees .........................................................................52 Build And Trust Your “Cabinet” ........................................................................................52 Get To Know Your Local Bank .........................................................................................53 Develop A Support Group ................................................................................................53

6 - MARKETING IS NOT OPTIONAL ......................................................54 Marketing Is More Than A Business Card ........................................................................54 Marketing 101 .................................................................................................................55 Advertising 101 ................................................................................................................56 Who Is Your Ideal Customer? ..........................................................................................56 What’s In A Name? A Lot. ................................................................................................57 Elevator Pitch ..................................................................................................................58 Develop A Tagline ............................................................................................................60 Start Branding Early .........................................................................................................61 Yes, You Need A Website ................................................................................................62

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Join Business Associations .............................................................................................63 Systematically Survey Customers ....................................................................................64 Develop Customer Testimonies .......................................................................................65 Look For Added Value .....................................................................................................66 Promote “Word Of Mouth” ...............................................................................................67 Develop A Startup Story ..................................................................................................68 Your First Marketing Plan .................................................................................................69 Sales Process In Three Steps ..........................................................................................70

7 - KNOW YOUR NUMBERS .................................................................72 Know Your Operating Costs ............................................................................................72 Reserves .........................................................................................................................73 Credit Is Your Lifeblood ....................................................................................................74 Take A Modest Salary ......................................................................................................75 Avoid Unnecessary Expenses ..........................................................................................75 Focus On Net Profit .........................................................................................................76 Guard Your Accounts Receivable .....................................................................................77

8 - LEARN FROM EXPERIENCE .............................................................78 Don’t Become Dependent ...............................................................................................78 Handle Terminations With Care ........................................................................................79 The Customer Is Not Always Right ...................................................................................80 Dealing With Complaints .................................................................................................80 Trades .............................................................................................................................81 Jealously Guard Your Time ..............................................................................................82 Start Over Every Year .......................................................................................................83 Dream Big, Think Big .......................................................................................................84 Keep A Startup Journal ...................................................................................................84

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8

Unbreakable

Rules

For Business Start-Up

Success WORKBOOK

©2013 SEAN C. CASTRINA ALL RIGHTS RESERVED Published in the United States of America ISBN 978-0-9891045-1-7    Champion Publishing Inc

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1 - YOU MUST BE QUALIFIED The first rule of successful business is that you––the business owner–– must be qualified to start and operate a business. You may have picked up this book because you’ve always dreamed of owning your own business, but you’re not really sure you have what it takes. The lessons in this section will help you learn about all the skills, personality traits, and habits that should help you be a successful business owner. They will also show you the harsh reality of starting up a business. If it’s not what you expected, I’m happy to have saved you the time, money, and heartache by learning these lessons now.

It’s Not Just About The Money Before you take the leap and start a business, ask yourself, “Why am I starting this business in the first place?” People start businesses for a variety of reasons. The chart to the right represents six of the most common reasons and the percentage of people who identified each reason. Match the reason with the percentage you think is most accurate (correct answers on the following page). ______ Make more money 41

______ Other reasons

17

______ Lost my job ______ Follow my desires

3 6

______ Be my own boss ______ Asked by someone to start a business together

6 29

Explain your ranking of “make more money” ______________________________________________________________________________ ______________________________________________________________________________ 2


What are your primary reasons for starting a business? ______________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Answers to activity on the previous page • • • • • •

Make more money - 6 Other reasons - 17 Lost my job - 6 Follow my desires - 41 Be my own boss - 29 Asked by someone to start a business together - 3

Understand The Risk Identify some of the risks you are taking by starting this business. Rate each risk. • ___________________________________

LOW

HIGH

• ___________________________________

LOW

HIGH

• ___________________________________

LOW

HIGH

• ___________________________________

LOW

HIGH

If your business failed would you lose your home or children’s college fund? ____________ Based on your analysis of the risks involved in starting this business, where are you on the riskometer? Draw an arrow representing your risk.

Everything is on the line

There is no risk 3


Think about the degree of risk you indicated on the previous page. Why do you think this is a risk worth taking? ____________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Entrepreneurs Think Differently Entrepreneurs start with an idea for a successful business that satisfies their personal expectations. In most situations, they do not know all of the factors that will eventually affect their success. As the business develops, they will adjust to the situations and obstacles they encounter. The business will morph into its most sustainable state.

Start here

Obstacle:

Obstacle:

Entrepreneurs do, however, have a plan. They recognize the importance of a flexible plan that allows them to adjust as needed.

Obstacle:

On the map grid, draw your “Treasure Map� with the treasure being success and the path identifying some of the obstacles you might face. Use this map to help you develop flexible strategies that move you toward your goal.

!

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Can You Make Profitability Your Passion? It is great if you can do what you love to do and get paid for it. However, in many cases your passion will not earn you a living. People like to ask, “Can I make my passion profitable?” Some people can. However, because many people are passionate about things that have no inherent monetization In many cases strategy, they are left with one option—create a profitable your passion will business that empowers their passions. If you are passionate not earn you a about something that also seems like good business sense, living. you are one of the lucky ones who can go into a business that you have a passion for. What is your passion? If money were no object, how would you spend your time?________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Take a look at the main idea expressed in your response above. Is there a way to turn your passion into profit? __________ If your answer is no, you must look for ways to become profitable apart from exercising your passion. If your answer is yes, you need to create a plan that will make this dream come true. Answer the questions below. What is your passion? __________________________________________________________ Can your passion become a business? ___________________________________________

If no, what is your business idea? __________________________________________

How does your business idea connect to your passion? _______________________

________________________________________________________________________

Of course, keep in mind that when you turn your passion into a business, it can turn fun into work. Sometimes it is best to pursue your passion purely as a passion and find some other way to pay for it.

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Sometimes it is best to pursue your passion purely as a passion and find some other way to pay for it.


Are You A Self-Starter? One of the great things about being an entrepreneur is the freedom to do things on your own. One of the scariest things about being an entrepreneur is the freedom to do things on your own. The thrill and stress are two sides of the same coin. Describe a time when you started or helped start something. _________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What are three things you learned about yourself in the process described above? 1. ___________________________________________________________________________ 2. ___________________________________________________________________________ 3. ___________________________________________________________________________ How will the lessons listed above help you be more successful in business? ____________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What is your plan for dealing with the obstacles and frustration that are common while starting up a business? Mark this response so you can find it when the need arises. _____ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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How would you describe your self-initiative? I’m not much of a go-getter. I have a lot of ideas but struggle to complete them. I have no problem starting and finishing.

How Strong Is Your Success Instinct? The dictionary defines instinct as a natural or innate impulse, inclination, or tendency. People who have a strong success instinct face the same obstacles and challenges as everyone else. They just power through them because of their strong success instinct.

If your success instinct isn’t very strong, be aware that this might be a limiting factor.

If your success instinct isn’t very strong, be aware that this might be a limiting factor. You should be prepared to deal with the obstacles that have the ability to stop you in your tracks. This is different from being pessimistic. Pessimists seldom succeed as entrepreneurs because they convince themselves that success isn’t possible.

Use the thermometer to identify your success instinct. How confident are you that you have what it takes to succeed? Optimist or Pessimist? Would the people who know you best describe you as an optimistic or pessimistic person? Explain your response.

I’m totally confident

________________________________________________ ________________________________________________ ________________________________________________ ________________________________________________

Pessimists seldom succeed as entrepreneurs because they convince themselves that success isn’t possible.

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I’m uncertain


You Don’t Need An Advanced Degree What qualifications and/or expertise do you have that makes you the best candidate for starting a business? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What do you believe is your income potential within the first year of operation? What is your potential within five years? Write your estimates below. $ ______________ $ ______________

Year One

Year Five

Strong Work Ethic I like what former Secretary of State, Colin Powell says about hard work as it relates to success, “A dream doesn’t become reality through magic; it takes sweat, determination and hard work.” Describe your work ethic. Are you tenacious and focused? Do you fly by the seat of your pants? What do you expect to be your normal workday?_____________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Who do you expect to be the hardest working person in your business? _______________ If the person listed above isn’t you, your business is already at a disadvantage. Each business requires a different time commitment needed to be successful. Some will require early mornings, and some, like restaurants, will require late evenings. The specifics

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are not important, other than that you have a commitment to work hard and take the lead at those crucial times. If your business success is dependent upon your work ethic, how successful do you expect your business to be? I have a great work ethic so the business should be successful. I struggle with motivation, but I believe I can work hard and be successful. I’m hoping someone else will work hard to make my idea successful.

Are You A Problem Solver? You probably already know this, but I’ll repeat it anyway—problems are part of the entrepreneurial life. Come to think of it, problems are a part of everyone’s life. Escaping problems isn’t possible, therefore, we must learn to solve them. Not all problems affect the bottom line, but every problem can affect the efficiency of your business. If you are a sole proprietor, the time you spend solving problems takes you away from the development of the business. There are two characteristics common to successful entrepreneurs. Rate yourself in each category:

never!

!

sometimes!

always

I learn from mistakes and don’t repeat them.

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I am willing to live with occasional failure.

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Describe a recent problem-solving situation. Summarize your problem-solving approach. ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Review the process you used above and identify a three-step process that you can apply to almost any problem-solving situation. 1. ___________________________________________________________________________ 2. ___________________________________________________________________________ 3. ___________________________________________________________________________ When you face a problem, are you energized or paralyzed? __________________________ How do you feel when you have solved a problem? _________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Are You An Effective Time And Priority Manager? How you manage your time is critical to your success in life and business. According to statistics, every year the average American invests… • 106 days sleeping • 87 days working • 16 days online • 12 days commuting • 45 days watching television That’s a total of 256 days invested in these five activities. In other words, 73% of the year is spent before the year begins. Everything else in life must be squeezed into 99 days! There are very few skills more beneficial to master in business, than time and priority management. The ability to start each day knowing what must be done, and the discipline to do it, is a personality trait that the successful have mastered.

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There are very few skills more beneficial to master in business, than time and priority management.


When was the last time you analyzed the way you spend your time? Use the diagram on the next page to evaluate your daily schedule. Each wedge represents an hour. Be sure to account for the five activities on the previous page along with activities that are unique to you.

How you manage your time reveals your priorities. Based on the allocation of your time, what are your priorities (in order of most to least time allotted)? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Do you think your priorities consistent with those of successful entrepreneurs? Explain. ___ ______________________________________________________________________________ ______________________________________________________________________________

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What are some things you need to eliminate from your schedule so you can focus on your business? ____________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What are some things you need to add to your schedule so you can be more effective at running your business? _________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Are You An “Industry Expert?� Will you know your industry better than anyone who works for you? Will you have an area within your industry that you will know better than anyone else? Seek to be an expert in something within your business. Customers and employees can tell when you have no idea what is going on. The good news is that they can also tell when you have a keen understanding of an area as well. The dictionary defines an expert as a person who has special skill or knowledge in some particular field. There is no special training necessary. Becoming an expert is as simple as reading three books on a topic about which you are passionate. I recently learned that if you read two books on a specific subject, you would know more than 95% of everyone else. Continue to learn, whether from reading books, going to trade association conferences, or training seminars.

If you read two books on a specific subject, you would know more than 95% of everyone else.

What are some subjects about which you might be considered an expert? 1. ___________________________________________________________________________ 2. ___________________________________________________________________________ 3. ___________________________________________________________________________

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What are some topics or subjects about which you would like to become an expert? 1. ___________________________________________________________________________ 2. ___________________________________________________________________________ 3. ___________________________________________________________________________ You can gain expertise through reading, attending a class, pursuing certification, or participating in online seminars. You don’t have to create a business that no one is doing; you simply need to be ten percent better than everyone else. Take some time to identify some books, classes, licenses, or certifications that would be beneficial to you and your business. List your ideas below: ___________________________ ______________________________________________________________________________ ______________________________________________________________________________

Great People Skills Can Make The Difference We all have met people with great people skills and others with terrible people skills. What specific characteristics are you looking for in a person with great people skills? __________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ List on the lines below five top characteristics identified above. Rate yourself in each skill.

poor!

!

average

Excellent

_________________________________

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_________________________________

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_________________________________

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_________________________________

|----------------------| ----------------------|

_________________________________

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How effective are your listening skills? Below are some helpful tips for improving your listening skills. 1. Give the speaker undivided attention. Repeat his or her words in your head as you hear them. 2. Allow your nonverbal behavior to communicate that you are listening. Nod in agreement, smile, say, “yes” or “good point.” 3. Provide immediate feedback. Recognize that your personal opinions or perceptions can cloud the words others speak. Say, “What I heard you say was…” or summarize what you heard. 4. Delay judgment. Don’t interrupt. Wait until the speaker is finished before expressing any disagreement or concerns. Give the same grace you expect to receive. 5. Respond with kindness, even if you disagree. Express your opinion without using condescending language. Which of the suggestions above do you need to incorporate into your listening skills? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

You May Be A Team Of One In a start-up business, you will have many people that I call “must hires.” You hire them because you need them to perform certain tasks. There is no guarantee that you will ever have a personal relationship with them. You shouldn’t expect to, in fact. Your business might be one you can operate alone. However, you might need to hire people to perform specific tasks. Almost every business manual written warns about the dangers of making the wrong hire. These most often include family members or friends. Why is it unwise to hire family members or friends to work in your business? ____________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Excel At The Right Business Success in one area does not necessarily produce success in other areas. Though some business principles are transferrable, some leadership skills are not. Take a close look at your personality type. Why do you think you are qualified to lead this business? _________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ How can your prior success help you be successful in this business? __________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ The hard truth is that your personal experience can only take your idea so far. Just because I am a successful business owner doesn’t mean I can be successful at owning any type of business. Whether you think you know the industry or you already have a plan, you may have overestimated the demand or profitability for your good or service. We sometimes forget that billionaire Donald Trump once tried his hand at owning an airline. 15

The hard truth is that your personal experience can only take your idea so far.


Characteristics Of Those With High Probability Of Failure We don’t like to talk about failure, but it is a realistic possibility for anyone who attempts something new. Thomas Edison was unsuccessful in his first 99 attempts to invent the light bulb. You and I should be grateful he didn’t give up! Failure doesn’t mean you’ll never be successful. Great lessons can be learned through the things we try that don’t work. Most businesses fail because of one or two weaknesses within the business owner. Below is a list of some of the personal characteristics that can lead to business failure. Mark the ones that are a concern to you. Lack of clarity and focus Lack of ambition Lack of persistence Negativity Lack of knowledge Lack of spending control/poor money management Lack of enthusiasm Lack of flexibility Does not work well with others Lack of self-discipline Lack of leadership Dishonesty Lack of planning Indecisiveness Lack of capital Ego What is your plan for addressing these personal weaknesses? ________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Define Your Own Success Standard What would success look like to you personally? This is not the same as your vision statement that defines what success looks like for the company. Before you start this start-up journey, define success for you personally. It is hard to know when you have reached the finish line if you do not know where it is.

Before you start this startup journey, define success for you personally. It is hard to know when you have reached the finish line if you do not know where it is.

What is your definition of success? _______________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ How will you measure success in your business? ___________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Earlier, you identified your estimated earnings for the first year of business. Other than money, what are you looking for in this business? ___________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Some people say that a business will be successful to the degree that it finds ways to give back to its community or meaningful causes. What are some partnerships you can develop so you can give back? How will this make you successful? ___________________ ______________________________________________________________________________ ______________________________________________________________________________

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What do you expect a workweek to be like? When will you have down time and time for your family and other responsibilities? _____________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

“Never Give Up” Nothing will bring you to the point of giving up like starting up a business. You can expect to experience loneliness, confusion, and fear. The best way to combat those inevitable emotions is through determination. Those who persevere through trials will succeed. Complete the following statement: I will never give up because _______________________ ______________________________________________________________________________ ______________________________________________________________________________

Describe a time when you quit something. It might have been an athletic team, school play, or a job. What caused you to quit? What emotions were you experiencing? ________ ______________________________________________________________________________ ______________________________________________________________________________ Someone said, “Never give up on something you can’t stop thinking about.” If you can stop thinking about your business idea, it’s not really a passion. If you can’t stop thinking about it, you can never give up.

“Never give up on something you can’t stop thinking about.”

Which statement best describes you: My business idea is good, but I don’t think about it all the time. Even though I’m scared, I think about my business idea all the time.

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If you marked the first box, revisit your business idea. If you marked the second box, you are ready to proceed. Turn the page and let’s take a look at the second unbreakable rule. I like this quote by gold medalist sprinter Jesse Owens: “We all have dreams. But in order to make dreams come into reality, it takes an awful lot of determination, dedication, selfdiscipline, and effort.”

We all have dreams. But in order to make dreams come into reality, it takes an awful lot of determination, dedication, selfdiscipline, and effort. Jesse Owens

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2 - YOUR BUSINESS IDEA MUST BE QUALIFIED This lesson will help you assess the viability of your business idea. Plenty of good ideas for products and services never fly because there simply isn’t a market for them—at least not a profitable one. You need to be as tough and honest about the viability of your business idea as you are about your basic qualifications to be the business owner. Avoid wishful thinking. “If you build it, they will come” isn’t always true. They will come if the business foundation is sound and you build the business correctly.

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Conduct Basic Market Research Just because you love golf and could use a driving range to improve your game, that doesn’t mean a driving range is a good business idea. It shocks me how many businesses are started based purely on an individual’s personal interests, and not good business sense. Not every good idea is a good business idea. You can learn that by trial and error or you can conduct your own market research. Select one or more of the following to evaluate the viability of your business idea: • Study research reports related to your product or service in your area. • Conduct competitive intelligence by gathering information about the success of potential competitors in your market area. • Choose people other than family and friends to take part in a test group to consider the need for your product or service. • Develop variable approaches that can be adapted to produce the best profitability estimation. Out of twenty random people, how many do you think need your product or service? ____ Why do they need it? ___________________________________________________________ ______________________________________________________________________________ 20


Keep Your Business Model Simple I think your first business should be simple, if at all possible. Sometimes we over complicate our business model. Start with a simple business model and add complexity in response to need, not desire. Many entrepreneurs make the mistake of creating the illusion of an organization when they are capable of handling the work alone or with limited help. Simple is better in every area. Your business model needs to encourage, not interfere with, success. What is the simplest way you can provide your product or service? ____________________ ______________________________________________________________________________ ______________________________________________________________________________ What are the non-negotiable requirements for your business? ________________________ ______________________________________________________________________________ ______________________________________________________________________________ The simpler the operation, the lower your operating costs will be—and the higher your expected profits.

Fill A Need Or Meet A Desire I have read many books on how to build and grow businesses. But when you get down to it, your business will either need to fill a need or meet a desire. Need-based businesses deal with products like food, housing, and clothing. Or basic services like plumbing, electricity, or auto repair. Want-based businesses often deal with the same goods or services but at a higher level of satisfaction and luxury.People are motivated to buy a product, contract a service, or enroll in a class because of their real or perceived needs or desires. If your service doesn’t fill a need or meet a desire, you will struggle to find customers. Think about your business idea. What needs or desires does it address? _______________ ______________________________________________________________________________ ______________________________________________________________________________

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Rank the needs or desires listed on the previous page in order of priority in your business plan. What is your primary purpose? 1. ___________________________________ 2. ___________________________________ 3. ___________________________________ For each of the above, describe the profile of your target audience. ____________________ ______________________________________________________________________________ ______________________________________________________________________________ Is anyone else in your area offering a similar service or product? _______________________ If yes, what makes your product or service unique? _________________________________ ______________________________________________________________________________

You need a product/ service people want with a price they are willing to pay that allows you to make the net profit you need to meet your financial goals.

Focus On Durable Goods And Services

Your product or service must be “durable.” In other words, it should be in demand for a long time. Durability is another one of famed investor Warren Buffet’s favorite qualities when investing in a company. So as you would guess, he was not interested in investing in the Internet companies of the “dot com” era. He was criticized, but he had the last laugh. Do not get caught up in what is popular today. Use the line below to evaluate the durability of your product or service. Place an X on the line indicating your opinion. This is a fad <----------------------------------------------------------------------> This is durable What are two or three things you can do to make your product or service more durable? ______________________________________________________________________________

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______________________________________________________________________________ ______________________________________________________________________________ Why do you think your product or service will be needed ten years from now? __________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ There is always that rare company that initiates a new product or service, but itâ&#x20AC;&#x2122;s an outlier. Donâ&#x20AC;&#x2122;t over think business. In its simplest form you need a product/service people want with a price they are willing to pay that allows you to make the net profit you need to meet your financial goals. Master the fundamentals of start-up success. You can always venture out later with a solid track record and business foundation.

Unique Selling Proposition Based on the answers you have just provided you now can form your USP (Unique Selling Proposition). The online Business Dictionary defines USP as real or perceived benefit of a good or service that differentiates it from the competing brands and gives its buyer a logical reason to prefer it over other brands.

The online Business Dictionary defines USP as real or perceived benefit of a good or service that differentiates it from the competing brands and gives its buyer a logical reason to prefer it over other brands.

What benefits is your company going to offer that your competition does not? __________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Model A Franchise You can learn a lot about what is needed to operate a business like yours by reviewing the materials offered by franchisers. It’s possible you won’t initially need everything described in the brochures, but the information will help you identify some aspects of the business you might not have considered.

You can learn a lot about what is needed to operate a business like yours by reviewing the materials offered by franchisers.

What are some franchises that offer a product or service similar to yours? ______________ ______________________________________________________________________________ ______________________________________________________________________________ Identify some qualities of the franchise you’d like to incorporate into your business. ______ ______________________________________________________________________________ ______________________________________________________________________________ How do you plan to improve on what the franchise does? What will be your competitive advantage? ___________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Consider A Franchise If you have the financial resources available, starting a franchise might be a good option. Which of the following are true about you? I’m frightened at the thought of starting something new. I desire independence, but I don’t really have any original business ideas. I have the financial resources needed to purchase a franchise. The statements above are good reasons to consider a franchise. What are some other reasons to consider a franchise? ________________________________________________ ______________________________________________________________________________ 24


There are several benefits to owning a franchise: • Immediate legitimacy • Initial and ongoing training • Marketing support • A clear financial picture of the potential What are some of the disadvantages of owning a franchise? _________________________ ______________________________________________________________________________ ______________________________________________________________________________ When it comes to your business idea, are there more advantages or disadvantages associated with owning a franchise? ______________________________________________

Start A Business — Or Purchase One There is a difference between a business owner and an entrepreneur. Entrepreneurs start businesses; owners own businesses. Purchasing an existing business has some of the same advantages as purchasing a franchise—established customer base, a history of earnings, etc. However, purchasing an existing business also carries with it any baggage associated with the previous owner. List some businesses in your area that you would be interested in owning. ______________ ______________________________________________________________________________ ______________________________________________________________________________

What makes these businesses attractive to you? ___________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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List the pros and cons to purchasing an existing business. Pros: ______________________ ______________________________________________________________________________ ______________________________________________________________________________ Cons: ________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Buy The Company You Work For This isn’t always possible, but there are situations in which the owner is willing to sell the company to an employee. It is much like buying an existing company but with one huge advantage—your familiarity with the business and its customers. There are some things to consider. Rate yourself in each of the following areas with 1 being “not true” and 5 being “totally true.”

1

2

3

4

5

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I have a good relationship with the owner

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The business is healthy and profitable

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The owner doesn’t have a transition plan

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I love the company I work for

Now, total your score: _________

If your score is 16-20, this is a real possibility. If your score is 10-14, this is something to look into. If your score is less than 10, you can look into it, but don’t count on this working.

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Review Your Idea Thoroughly Donâ&#x20AC;&#x2122;t be afraid to ask hard questions about your business idea. In doing so, you might discover some facts that will influence your decision. List below some questions you should ask about every business idea. Use these questions to periodically evaluate every existing business and new idea. 1. __________________________________________________________________________ 2. __________________________________________________________________________ 3. __________________________________________________________________________ 4. __________________________________________________________________________ 5. __________________________________________________________________________

Donâ&#x20AC;&#x2122;t Quit Your Day Job Owning your own business can give your life new passion and purpose. However, you should proceed with caution with regard to your current job. It might not be necessary for you to leave your job. Your business might become a great source of additional income. To determine whether you should quit or stay, answer the following questions: What will you be personal responsible for in the new business? _______________________ ______________________________________________________________________________ ______________________________________________________________________________ How many hours per day and week will you need to invest in the business? ____________

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3 - PLAN FOR SUCCESS This lesson will guide you through the ins and outs of a business plan. The three primary objectives of your business plan are to help you raise capital, confirm you have a profitable business idea, and provide an initial roadmap to follow during the first couple of years. You might have additional questions following this lesson. That’s OK because we will deal with some related issues in future lessons.

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Don’t Count On Venture Capital Let me make this clear: You are not creating a business plan because you think you’re going to get venture capital. Less than 1% of startup companies obtain money from venture capitalists. That means the competition for venture capital is fierce. The work you put into presenting your idea most likely won’t land you an investment. Spend your time elsewhere. Venture capital takes a substantial risk with the hope for a large gain. This group will often take an equity position in the company and may involve themselves in key company decisions. The fact is that some start-ups need substantial initial capital because they are bringing an invention into market. They may also be introducing a new industry, or an improvement in an existing industry.

Venture capital takes a substantial risk with the hope for a large gain.

Do you believe your idea is worthy of consideration by a venture capitalist? Why or why not? _________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Obtain Competitive Intelligence Before starting a business, you must know everything you can about your competition. The more you know about your competition the better prepared your company will be to capitalize on their weaknesses.

Before starting a business, you must know everything you can about your competition.

Who are your top three competitors? 1. ___________________________________________________________________________ 2. ___________________________________________________________________________ 3. ___________________________________________________________________________ As you think about your potential competitors, view their businesses through the following lens. Ask yourself these questions about every competitor. 1. How do they answer the phone and handle customer service? 2. How helpful is their website? 3. How accessible is the owner/operator? 4. Describe the quality of their products and/or services. 5. How do they price their products and services? 6. What are the strengths of the business? 7. What are the weaknesses of the business? How will your business be different from their businesses? ___________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ If you just plan to copy what someone else is doing, one of you is unnecessary.

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Obtain Baseline Pricing Pricing goods and services can be difficult. Setting a price too low or too high will have a negative impact on the vitality of your business. Conduct a price analysis on your product or service. Sometimes, price competition is the most important aspect of your market. However, low product quality or a lack of professionalism in your market may allow you to set a higher price, and still be highly competitive.

Setting a price too low or too high will have a negative impact on the vitality of your business.

The price of your product or service says something about you. Sometimes a potential customer will see the lowest price and wonder if that price comes from cheap manufacturing or bare-bones services. On the line below, write the low and high prices. Low: ____________

High: ____________

Now, mark on the line your pricing for a similar product or service. Explain your reasons for your pricing structure. __________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What additional value do you plan to offer and why will it allow you to charge more? _____ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Define Your Competitive Advantage Every successful business has a competitive advantage over its competition. We see these advantages in a companyâ&#x20AC;&#x2122;s marketing strategy. Your competitive advantage must address a real or perceived need that your competition is ignoring. So, think about your potential competition. What needs among their customers are they ignoring? ___________________ ______________________________________________________________________________ ______________________________________________________________________________ At which of the following do you intend to be excellent? Price Speed of service Quality Product or service options Customer service Other: _____________________________________________________________________ Why should a customer choose your company over another? If you donâ&#x20AC;&#x2122;t know the answer to this question, then you should not be starting this company. Your competitive advantage can be broad in its scope, but these qualities are musts for success. I would also warn against customer service being your competitive advantage, as most companies think they are providing superior customer service compared to their competition. This is also an area that will take the longest, normally, to bear fruit.

I would also warn against customer service being your competitive advantage, as most companies think they are providing superior customer service compared to their competition.

Remember, your customers will ultimately decide if you are living up to your promises. Be careful not to promise things you canâ&#x20AC;&#x2122;t incorporate into your business culture.

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Mission Statement One of the most important elements in your business plan is your mission statement. It describes the purpose of your company. It must be concise and memorable. It clearly describes your business and how you will provide value to your target customers.

A mission statement describes the purpose of your company.

Use the following questions to help craft your mission statement. Who is your target customer or key market? _______________________________________ ______________________________________________________________________________ What will you do or provide to your target customer or key market? ___________________ ______________________________________________________________________________ What makes your product or service unique? ______________________________________ ______________________________________________________________________________ What value will you provide to your target customer or key market? ____________________ ______________________________________________________________________________

CVS Mission Statement We will be the easiest pharmacy retailer for customers to use.

Now you have the necessary elements to create your mission statement. Use the space below to write your mission statement using the ideas expressed above. ___________________________

______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Vision Statement A mission statement focuses on what a company does and how it does it. A vision statement describes what you want the company to become. What do you see in three to five years? This is a verbal picture of your future expectations for your business. A mission statement is informational; a vision statement is inspirational.

A vision statement describes what you want the company to become.

If your company could achieve only one thing over the next five years, what would it be? _ ______________________________________________________________________________ ______________________________________________________________________________ You now have the foundation for your vision statement. What is your vision for your business? _____________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Value Statement Your value statement is the last piece of your companyâ&#x20AC;&#x2122;s declarations. The value statement is a set of core beliefs your company will operate by. These normally reflect the personal values of the owner or founder. You will have many opportunities to turn a profit, some of which will violate your core values.

The value statement is a set of core beliefs your company will operate by.

A value statement describes the core beliefs by which your company operates. What are a few of your non-negotiable personal values? _______________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 33


How do you plan to incorporate these values into the culture of your company? _________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Rank the following values based on their importance to you with 1 being not important and 5 being critical.

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Social responsibility

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Integrity

What is your value statement for your business? ____________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Create A Business Plan Every business—large or small—needs a business plan that provides a crystal clear picture of how your company will operate. Your business plan might encourage investors, inspire employees, and attract customers. You’ve already worked on portions of the plan. We now need to assemble the business plan so that it makes sense to investors, bankers, and partners. Review the previous pages and create a document that answers (or leaves space for answers to) the following questions. Don’t worry if you don’t have answers to all of the questions yet. In upcoming lessons, we will deal with the missing information. • What will your business do? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ • What research confirms there is a demand for your business in the market? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ • Who will be your competition and what are their strengths and weaknesses? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ • What is your competitor’s pricing structure? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ 35


• What will be your competitive advantage(s) and distinctions? (Why will customers choose you?) ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ • Who are your ideal customers and how are you going to market to them? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ • What is your one year marketing plan? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ • What skills or expertise do you need to hire? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ • What will be all the costs to operate this business per week and month? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________

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• Is your net income enough to pay you the income you wish to make? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ • What are your mission, vision, and value statements? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ • What are your one-year, three-year, and five-year goals for your company? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ If you don’t have time to create a business plan, you don’t need to start a business!

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Make An Exhaustive List Of Pre-Launch Tasks Now that you have a business plan in place, letâ&#x20AC;&#x2122;s move on to the process of starting up your business. Because your business is unique, your list of pre-launch tasks will be unique. Without exception, the next step was to formulate an exhaustive list of every possible thing that needed to be done prior to â&#x20AC;&#x153;turning the lights onâ&#x20AC;? and serving the first paying customer.

Because your business is unique, your list of pre-launch tasks will be unique.

On the next page are some universal tasks that apply to just about every business. Take a few moments to identify your plans for addressing these items. List your responses in the space provided. Date you plan to have pre-launch tasks completed: _________________________________ already complete Business name:_____________________________________________________ Tagline (service): ____________________________________________________ Web domain: _______________________________________________________ Website design: _____________________________________________________ Corporation, partnership, sole proprietor? _______________________________ Licenses and permits: _______________________________________________ Business bank account: ______________________________________________ Physical location: ____________________________________________________ Signage: ___________________________________________________________ Phone, office setup: _________________________________________________ Machinery, tools, equipment needed: ___________________________________ Staffing needs: ______________________________________________________ Other: _____________________________________________________________

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Other: _____________________________________________________________ Other: _____________________________________________________________ Other: _____________________________________________________________ Other: _____________________________________________________________ Other: _____________________________________________________________

List everything you can imagine needing to get your business operational. Return to the list frequently to make sure you are making progress. Donâ&#x20AC;&#x2122;t attempt to start serving customers until all of the needs above (and any others you identify) are met.

Consider The Best Launch Season There is a right and wrong time to start a business. Because business operates in predictable cycles, you need to plan your launch to capitalize on the strongest seasons. Starting your business at the wrong time can have long-lasting negative effects.

There is a right and wrong time to start a business.

What is your primary product or service? __________________________________________ ______________________________________________________________________________ When are people most likely to be looking for this product or service? __________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What significant personal events do you anticipate over the next 36 months? ___________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 39


Keep in mind, you want to be up and running when demand is at its peak. So, if you plan to start up a coffee shop, think about late summer. That way youâ&#x20AC;&#x2122;ll have all the kinks worked out before getting into the busier fall season. Based on the information above, when is the best time to begin your business? Summer, specifically: ________________________________________________________ Fall, specifically: ____________________________________________________________ Winter, specifically: __________________________________________________________ Spring: specifically: _________________________________________________________

Adapt To Changing Circumstances Though you have a great business plan, you will discover that things seldom work according to the plan. Sometimes you find success in an area you never imagined. At other times, you realize that your best idea just didnâ&#x20AC;&#x2122;t work. Because businesses are fickle, you need to maintain a flexible attitude toward the business, especially in the first six to twelve months. Think about your primary business objective. What are some additional products or services that you might consider offering in the future? ______________________________ ______________________________________________________________________________ ______________________________________________________________________________ How quickly do you think you could have a new product or service on the market? Two weeks One month Six weeks Two months Longer: ___________________________________________________________________

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4 - PROTECT YOURSELF AND YOUR BUSINESS There are many things to do in the startup phase of your business. It is important that you consider all the ways to protect yourself—and your business—as you get started. From incorporation to insurance to intellectual property, this lesson will help you take steps needed to protect yourself and your business.

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The owner of a corporation doesn’t carry as much liability as a Sole Proprietor, both legally and financially. When you incorporate, you separate your personal belongings (home, cars, etc.) from your business. Therefore, if the business is sued or fails, your personal life is unaffected. There are some additional benefits to being incorporated: • Tax advantages • Writing off health insurance premiums • Savings on self-employment taxes • Savings on life insurance There are three basic types of corporations. Which best suits your business? C Corp is for larger companies that sell stock in their company and have over 100 shareholders. S Corp businesses can sell stock but have no more than 100 shareholders. The profits and losses are passed on to the business owner’s personal income. LLC, which has always been the preferred choice for small businesses, does not have stock but pass all profits and losses to personal income. What is your state’s process for incorporating your business? _________________________ ______________________________________________________________________________ ______________________________________________________________________________ 41


Purchase Insurance It is a mistake to think you save money by having the bare minimum or no insurance at all. Insurance keeps you in businessâ&#x20AC;&#x201D;as it only takes one catastrophe to bankrupt the business.

Insurance keeps you in businessâ&#x20AC;&#x201D;as it only takes one catastrophe to bankrupt the business.

Depending upon your business, there might be industry associations that offer discounts on insurance. You should be aware of the standard policies needed such as workerâ&#x20AC;&#x2122;s compensation and general liability, but you should also consider getting a personal and business umbrella policy. It gives a final layer of protection.

Based on your business, what kinds of insurance do you need? ______________________ ______________________________________________________________________________ ______________________________________________________________________________ Who is your insurance agent and when are you scheduled to discuss your needs? _______ ______________________________________________________________________________

To protect yourself and your family, you can purchase a health insurance plan with a very high deductible so that at least you have some protection.

To protect yourself and your family, you can purchase a health insurance plan with a very high deductible so that at least you have some protection. A high deductible plan allows you to have insurance in the event that something happens, but it will not cost much per month. When you talk to companies about health insurance, discuss the advantages of a Health Savings Account (HSA) plan. Also be sure to ask about preexisting condition limitations and specific aspects of the health plan.

Describe your personal health insurance situation. __________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Protect Your Intellectual Property Intellectual property refers to a name, logo, trade secret, published work, or invention. It is the result of your creativity; therefore, it has value and must be protected. Other common types of intellectual property include copyrights, patents, industrial design rights, and trade secrets, which apply in some jurisdictions. Trademarking, trade secrets, and patents seem to be the ones that apply most in businesses. There are subtle but important differences between these types of protection that you need to learn and apply to your specific business situation. What intellectual property do you need to protect? __________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Do you have any inventions, unique processes, or competitive advantages that warrant being protected? ____ Yes ____ No

If You Partner, Consider These Rules If you have chosen a partnership, there are some rules to follow. Sadly, I have learned all these rules the expensive way. Going into a business partnership is very similar to a marriage. In the beginning, you will spend more time talking to and being around this person than your spouse. Before starting a partnership, do the following: â&#x20AC;˘ Negotiate what the buyout would be well before you start the business. â&#x20AC;˘ Write out the terms of your partnership agreement and have it reviewed by an attorney. â&#x20AC;˘ Develop an appropriate non-compete and/or nondisclosure agreement. This protect the business from competition started by one of the partners. If you are considering a partnership, what makes your partner a good fit? ______________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Who will be responsible for what? List responsibilities for each partner. _________________ 43


______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ It is best to write out the basic terms of your partnership agreement and have it reviewed by an attorney. If you cannot afford an attorney, at the very least, get this agreement notarized.

Establish The Proper Legal Framework You need to be aware of all needed licenses, permits, and certifications for the industry you are entering. You can usually find these out by going to your local business tax office or contacting your local Chamber of Commerce. If at all possible, obtain all the licenses yourself as soon as you can. Donâ&#x20AC;&#x2122;t wait. Failure to obtain all of the proper licenses can prevent your form opening your doors on your anticipated target date. Remember: government bureaucracies can be painfully slow. Allow for additional time beyond the timeframes stated when obtaining the licenses you need. Which of the following do you need?

Failure to obtain all of the proper licenses can prevent your form opening your doors on your anticipated target date.

Local licenses, permits and registrations Employer Identification Number, or EIN Professional licenses State tax license

State labor department registration (required by most, but not all, states) Liquor license (only as applicable) Other: _____________________________________________________________________ How long will it take to get your legal framework in place? ____________________________ ______________________________________________________________________________

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Know All Applicable Labor Laws As a business owner, you must adhere to all labor laws. Unfortunately, these can be confusing and complex. However, violating these laws can have catastrophic consequences. Here are four specific categories of labor laws that you should note: • Hiring discrimination. Under federal law, you cannot hire employees based only on their gender, race, ethnicity, marital status, or sexual orientation. • Child labor. Under the Fair Labor Standards Act, it is unlawful to employ children younger than 14 in nonagricultural occupations. Children 14-15 can be employed outside school hours for limited periods of time. 16 and 17-year-olds can be hired in any occupation other than those deemed “hazardous.” • Independent contractors. The IRS has established guidelines to determine whether an employee is a regular employee (part-time or full-time) or a contract worker. • Immigration law. Businesses must keep an up-to-date “I-9” form—which verifies a worker’s legal citizenship or immigration status—on file for every employee. Review the labor laws above. Which do you believe will affect your business? ___________ ______________________________________________________________________________ ______________________________________________________________________________ Check with the Small Business Administration office near you for information and advice regarding labor laws.

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5 - BUILD A SUCCESSFUL TEAM When starting a business, your team consists of staff, professional advisors, and mentors. Building a successful team is one of the most important things that will lead to your businessâ&#x20AC;&#x2122; success. In this lesson you will learn how to find, and surround yourself with people who will support your idea, respect your leadership, who you will work well with, and who will provide helpful guidance.

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Qualify Your Labor Market Think about your business and determine the level of skill needed to keep it functioning efficiently. Using the thermometer to the right, indicate how skilled you need your employees to be.

Extreme skill

List the specific skills you need to have on your team. For instance, do you need a web developer, electrician, or human resources director? __________________________ __________________________________________________ __________________________________________________

Unskilled

__________________________________________________ What are five questions you will ask every potential employee? 1. __________________________________________________________________________ 2. __________________________________________________________________________ 3. __________________________________________________________________________ 4. __________________________________________________________________________ 5. __________________________________________________________________________ 46


How will you find skilled employees? ______________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Why will potential employees want to be a part of your company? _____________________ ______________________________________________________________________________ ______________________________________________________________________________

Try To Hire The Best, Regardless Make it your mission to surround yourself with the most talented, smartest, experienced and competent team of employees you can find—and make sure you actually look for them. Sadly, it is all too common for new business owners to hire family members and friends, either out of a sense of obligation or by default.

Make it your mission to surround yourself with the most talented, smartest, experienced and competent team of employees you can find.

What characteristics are you looking for in potential employees? ______________________ ______________________________________________________________________________ ______________________________________________________________________________ How will you determine if people embody those characteristics? ______________________ ______________________________________________________________________________ ______________________________________________________________________________ Try to hire staff that is outside your immediate comfort zone. The main criterion is whether they will add value you your company. Do not be intimidated or threatened because someone is older with twenty years more experience than you. Let more experienced employees know that you value their input, but expect their full support for the decisions that you alone are authorized to make. Remember—and don’t be afraid to gently remind them—you’re the boss.

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There Are Mechanics To Hiring Draw a flowchart below that describes your hiring process.

Which of the following do you already have in place? A list of questions to ask prospective employees (see the next section). A job description for every position in the company. An employment letter outlining the 30-day probationary period, expectations, benefits, etc. A list of questions to ask references. A form letter to send those you chose not to hire. A clear understanding of the questions NOT to ask during the interview process. A clearly-defined process to follow in the event you need to dismiss an employee. Start now creating the information listed above that you do not yet have in place. Then, put together an employment folder or manual so that your hiring process is simple and consistent.

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Approach Staffing Strategically Create an organizational chart that identifies the full-time and part-time positions you need in your business. Draw the chart in the space below.

Every employee is a walking-and-talking company representative. Those with direct and sustained contact with your customers should strongly reflect your companyâ&#x20AC;&#x2122;s business ethos. How important is it for you to like the people on your team? Mark your response on the line below. Not important

Very important

Are there other people you need to involve in the hiring process? If so, who are they? ____ ______________________________________________________________________________ ______________________________________________________________________________ 49


If You Don’t Have The Skills, Partner You might think that having a strong background in the industry that you’re planning to enter is essential. Not necessarily. If you can find a partner with the background you lack, you may be more prepared than you realize. Expertise in your industry is a pre-requisite for starting a successful business. If you don’t have it, make sure to partner with, or hire, someone who does.

Expertise in your industry is a prerequisite for starting a successful business.

What are your personal strengths and how do they position your company for success? __ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What are your personal weaknesses? In what areas of business are you must unsure? ___ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Who are some people you might want to bring alongside to work in your areas of weakness? ___________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

In the end, a partnership is a mutual learning experience.

You need to learn the business in your own right, and your partner, however experienced, won’t have all the answers. Make sure your partnership agreement clarifies how business decisions are to be made. In the end, a partnership is a mutual learning experience.

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Lead Like A Coach When your business starts, it will function a lot like preseason workouts for a football team. Youâ&#x20AC;&#x2122;ll quickly identify the areas that need work and you will need to address those areas with encouragement and motivation. You need to coach your employees. What are some characteristics of great coaches? ___________________________________ ______________________________________________________________________________ ______________________________________________________________________________ List the characteristics on the lines below and rate yourself in each area with 1 being poor and 5 being excellent.

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Which characteristics need the most work? ________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What is your plan for addressing those areas? ______________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Maximize The Talent Of Your Employees To be a great leader you must be able to place people where they will be most productive. Successful business owners will maximize the talent of their employees. It is your job to know what each person’s talent is and to place him or her in a position to thrive. Consider the organizational chart you developed in a previous step. What are three things you can do to bring out the best in your employees? 1. __________________________________________________________________________ 2. __________________________________________________________________________ 3. __________________________________________________________________________ What are some things you can do to maintain employee morale and devotion? __________ ______________________________________________________________________________ ______________________________________________________________________________

Build And Trust Your “Cabinet” The cabinet is the president’s “go-to” team. All decisions will go through one or more of these individuals. Your initial support team usually consist of an accountant, lawyer, banker, and bookkeeper. Over time, this group might include key leaders from your staff. How confident are you that your “cabinet” agrees with your Value Statement? Not confident

Very confident

What specialists do you need to hire or contract? __________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Get To Know Your Local Bank It’s tempting to shop around for the cheapest banking options, but that’s not always the wisest thing to do. If you cultivate a relationship with a local bank, you will find that relationship paying huge dividends down the road. You’ll still have to apply for loans and adhere to government regulations regarding financial matters, but your banker can help you navigate the otherwise confusing waters of paperwork and bureaucracy. Which bank do you think is the best choice for your business services? ________________ ______________________________________________________________________________ ______________________________________________________________________________

Develop A Support Group It’s important to have one or more people in your life that can help you achieve your business dreams. We all need mentors and cheerleaders. Who are three people you can include in your support group? ________________________ ______________________________________________________________________________ ______________________________________________________________________________ The following organizations also might be helpful in providing support. Which of these are available in your area? SCORE A business owners group Business coaches Other business leaders

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6 - MARKETING IS NOT OPTIONAL If you donâ&#x20AC;&#x2122;t find customers for your product or service, you unfortunately will not stay in business for long. Marketing is all about knowing who your ideal customer is, deciding what means of advertising will best reach this group with the message you have determined will make them use your product or service. This lesson will help you create your marketing plan, and think through specifics of your business name, website, taglines, and more. After completing the Action Steps in this section, you will walk away with a better plan for reaching the right customers and keep them coming back for more.

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Marketing Is More Than A Business Card Many businesses fail because they under-budget for marketing. I am a big fan of word-of-mouth, but it is rare that this can bring in enough customers to build a successful company. Which of the following are elements of your marketing strategy?

I am a big fan of word-of-mouth, but it is rare that this can bring in enough customers to build a successful company.

Website Business cards Newspaper advertisements Radio or television ads Social media (Facebook, Twitter, Pinterest) Direct Mail Others: ____________________________________________________________________

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What are some creative ways you can market your business? ________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What percentage of your net profit do you plan to invest in marketing? ________________ Nimble small business owners help sponsor and show up for important local events, including music festivals and fairs. They register with the Chamber of Commerce and go out of their way to become known in their community. Be pro-active and visible, not just hoping people will spread the word for you.

Marketing 101 Marketing is the your overall strategy. Advertising is the means. You will use various means of advertising to accomplish your marketing strategy. Five steps to a marketing plan 1. The Lay of the Land. Summarize your competitive intelligence and your business plan. Combine these in an honest and critical report on your business, your competition, and your customer base. 2. The Strategy: Define your product, pricing strategy, and your sales goals for the year. 3. The Tactics: What is your detailed plan on how to meet your goals through each marketing avenue? Think advertising, sponsorship, events, and social media. 4. The Logistics: Where can you best devote your marketing budget? 5. Report In: Write a 1-page summary of the above and insert it in your business plan What kinds of marketing strategies do businesses use to attract your business? _________ ______________________________________________________________________________ ______________________________________________________________________________

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What strategies will be most effective when focusing your business on your target customer? ____________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Advertising 101 Advertising is the primary way to reach potential customers with your message. Which of the following do you think will be effective in reaching your audience? (circle all that apply)

television

radio

mail

online

podcasts

What other unique approaches to advertising will be effective? ________________________ ______________________________________________________________________________ ______________________________________________________________________________ If you can only do one kind of advertising, which one will you chose and why? __________ ______________________________________________________________________________ ______________________________________________________________________________

Who Is Your Ideal Customer? Everyone wonâ&#x20AC;&#x2122;t be your customer. Therefore, your business should have a target customer. What is your target gender? _____________________________________________________ What is the target age group? ___________________________________________________ What demographic group needs your product or service? ___________________________ Will your companyâ&#x20AC;&#x2122;s image or reputation matter much to this group? __________________

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Once you know your target group, you need to determine if the target group exists in your target area. If not, you need to reconsider the business idea or location. What are some things you can do to market your product or service directly to your target customers? ___________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Whatâ&#x20AC;&#x2122;s In A Name? A Lot. The naming of your business is more important than you might think. A non-Internet business should have a name that clearly tells the customer what kind of business it is, and the type of service it provides. If your business is Internet-based, aim for something memorable and unique.

The naming of your business is more important than you might think.

Think about some businesses in your area. What are some names that communicate with clarity? What is it about those company names that makes you want to visit them? ______ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Are you planning for your company to expand into other areas or will it remain in one location? ____ expand ___ remain in one location If you already have a name, write it here: __________________________________________

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List three possible names and ask close friends and acquaintances to help you evaluate the possibilities. Keep in mind the fact that changing the name of your company after it is established can be an expensive process. 1. __________________________________________________________________________ 2. __________________________________________________________________________ 3. __________________________________________________________________________ Now, go back to the list and rank the potential name ideas in order from first to last. Eliminate the third choice and do more evaluations of the remaining two options. Within a couple of days, you should have a winning name for your business. Potential name is _____________________________________________________________ Final Name Qualifiers Have you checked with your State Corporation Commission to see if it is available? Before finalizing a name is the domain name available (.com )? If you answered yes to the above questions you have your name Purchase your domain name (check and make sure you have spelled it correctly before final purchase). Now you are ready to incorporate your business.

Elevator Pitch This is a drill down on your USP (Unique Sales Proposition) from chapter 2. What is it that your company offers (product or service) and why should customerâ&#x20AC;&#x2122;s choose you over your competition? You need to be able to own some simple statements that communicate this in a way that makes prospective customerâ&#x20AC;&#x2122;s want to know more about your company. What problems do you think you can solve better or faster then your competition? _______ ______________________________________________________________________________ ______________________________________________________________________________

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Write an elevator pitch you and your employees will commit to memory. ________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Develop An Image Your goal, with your logo and color scheme, is to create a professional image. If you hope to own a successful business, it needs to look like one from day one. To keep it simple, respond to the following: • What color or colors do you want in the logo? ____________________________________ • What look are you hoping to portray? Will it be modern, classic, retro, etc.? ___________ ____________________________________________________________________________ Sketch a few logo ideas below. Don’t worry about your art ability. Just express your ideas.

Mark through the ideas that won’t translate well to printed materials, T-shirts, and uniforms.

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Rate your logo idea based on the following criteria with 1 being poor and 5 being excellent.

1

2

3

4

5

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Adaptability

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Timelessness

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Adaptability

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Uniqueness

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Adaptability

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Appropriateness

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Simplicity

Develop A Tagline A tagline is a short, catchy phrase that emphasizes a quality of service or a promise your company will deliver. Think about some of the catchy taglines you know. List a few below. ______________________________________________________________________________ ______________________________________________________________________________ Now identify a couple of promises your company will deliver or a quality of service you intend to provide. List them here. _________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Use the space below to list some tagline possibilities. Review these with your closest advisors and select the one that is most appropriate. ________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Start Branding Early Branding is a promise you make to your customers about an important quality or attribute they can expect to receive from using your product or service.

Branding is a promise you make to your customers.

People often remember your branding better than they remember your products or services. They know if you have delivered on the promises you made and their future business is dependent upon that information. So, you canâ&#x20AC;&#x2122;t go into the branding process haphazardly. You must be intentional about establishing your business identity in such a way that you can deliver on the promises you make. What promise are you making in conjunction with your product or service? _____________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Which of the following characteristics should be included in your branding? Durability Low prices Locally made or grown Handcrafted Fast Convenient Professional Other: _____________________________________________________________________ Which of the characteristics above need to be included in your branding? Circle two or three.

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Now, using the words circled on the previous page, create a short, concise statement that describes your competitive advantage. ____________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Yes, You Need A Website Many would-be small business owners wonder A web site is an integral whether they need an online presence. If they are part of business marketing doing all of their business locally, they figure that and advertising. traditional advertising should be enough. Moreover, if none of their products or services will ever be sold online, they see even less reason to invest in a web site. A web site is an integral part of business marketing and advertising. Most of your prospective customersâ&#x20AC;&#x201D;even those born during the heyday of radio and televisionâ&#x20AC;&#x201D;are surfing the Internet. Developing an online presence is as essential as having a business card. Prospective customers should be able to find your products and services described there, as well as basic contact information. Use the following checklist to develop a basic web presence. You can add additional pages and information as needed. Homepage design Products and services Contact information Information about the company and/or owner Mission and value statements Photos of location, staff, and products How would you describe the websites of your competitors? __________________________ ______________________________________________________________________________ ______________________________________________________________________________

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______________________________________________________________________________ How can you meet your customersâ&#x20AC;&#x2122; needs and expectations through your website? _____ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Do you have the ability to build a basic website or do you need to hire someone to do it for you? If you need to hire someone, ask family members and friends. You might find a high school student or college student who is willing to take on the project for a little spending money. Regardless of who you choose, create an agreement that establishes the timeline for completion and payment. Consider a down payment of 50% with the balance paid upon completion.

You might find a high school student or college student who is willing to take on the project for a little spending money.

Join Business Associations A simple way to build credibility and to learn more about your industry is to join associations. These are also a great way to learn what is working for others within your industry. They may also offer discounts on products and professional services you may need. General associations like the Chamber of Commerce may be good for networking and sharing local marketing tips. However, Industry-specific associations might help with labor recruitment, training, getting involved in lobbying and keeping up on changes to regulations and other important industry news.

General associations like the Chamber of Commerce may be good for networking and sharing local marketing tips.

List some associations available in your area: 1. __________________________________________________________________________ 2. __________________________________________________________________________ 3. __________________________________________________________________________

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What are some national associations dedicated to your area of expertise? 1. __________________________________________________________________________ 2. __________________________________________________________________________ 3. __________________________________________________________________________ Talk to other business owners in your area and industry. Find out what associations they are actively involved in. Ask which associations they find worthwhile and why. What benefits might you gain from joining one or more associations? _________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Systematically Survey Customers Customer feedback is crucial to being a successful company. There are several ways you can distribute surveys. If you keep the survey short, you can use a card at the point of sale or provide a postage paid card to be returned in the mail. Use email lists to send out surveys created with online tools such as wufoo.com or surveymonkey.com. When you analyze the data, report the summary on your website and in other advertising pieces. Before you send out a survey, you need to identify the information you want to gather from customers. The survey must be no longer than five questions and able to be completed in five minutes or less. You might consider offering incentives for completion of the survey. Offer a discount coupon or free item when surveys are submitted.

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Before you send out a survey, you need to identify the information you want to gather from customers. The survey must be no longer than five questions and able to be completed in five minutes or less.


Below are some possible questions to ask on the survey. Mark the five questions that best suit your business. Did the product/service meet your expectations? Would you use our company or buy our product again? Would you refer our product or service to a friend? Why or why not? Do you have a specific concern that needs to be addressed? How helpful was our staff? How friendly was the staff? Were you welcomed upon arrival at our business location? How long did you wait before being served? What additional products or services do you want us to provide? How likely are you to do business with us again?

Develop Customer Testimonies Customer testimonies are a powerful tool for businesses. Potential customers like seeing and hearing from people who have done business with you. Testimonies are easy to obtain because of the proliferation of phones that shoot video and record audio. Below are some additional sources of testimonies. Which ones do you already have in place? Facebook Reviews. LinkedIn Reviews. YouTube Video Reviews. Local Search Directories. Other: _____________________________________________________________________

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Why would customer reviews help build your business? _____________________________ ______________________________________________________________________________ ______________________________________________________________________________ List ten people you can ask for testimonies before starting your business. Consider this your pilot group. 1. ___________________________________ 6. _____________________________________ 2. ___________________________________ 7. _____________________________________ 3. ___________________________________ 8. _____________________________________ 4. ___________________________________ 9. _____________________________________ 5. ___________________________________ 10. ____________________________________

Look For Added Value Can your product perform more functions than the competition? Do you offer additional complimentary services? Consider how you might bring additional value to your customers. A fresh competitive advantage might also allow you to increase your prices. Use the pyramid diagram below to identify the added value you can provide through your business. Begin at the bottom with the basic product or service. Then, work your way to the top adding value by adding additional services. ____________________________________________________

Added value

_________________________________________________

Added value

_____________________________________________

Added value

__________________________________________

Added value

_______________________________________ 66

Basic product or service


Which of the added value items on the previous page do you believe you can deliver? ____ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Try to think broadly in terms of its branding or competitive advantage potential. If customers consistently say, “Oh yeah, that’s the company that offers that special extra,” you are on your way to something exciting. Once you have determined how you will add value, communicate it in your marketing.

Promote “Word Of Mouth” Create a product or service that people want to tell others about. It will become advertising that you won’t have to pay for. In today’s world of Twitter and Facebook, your customers will remark about your business. You get to decide if those remarks will be positive or negative. List some people you can enlist as “ambassadors” for your business. Select people who have an audience and are well-respected among your target customers. 1. __________________________________________________________________________ 2. __________________________________________________________________________ 3. __________________________________________________________________________ What do you want people to say about your product or service? _____________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What are three things you can do to make sure these comments are accurate? 1. __________________________________________________________________________ 2. __________________________________________________________________________ 3. __________________________________________________________________________

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You can also try to cultivate some key “influentials” early on. These are people who, by virtue of their position in a community, naturally tend to speak to lots of other people and whose opinions may be highly valued. If they are familiar with your pricing and product, and are sold on your company, they can spread the word “virally”—perhaps through a blog, Facebook, or another community-based information network. This is why you have to be a people person.

If people are familiar with your pricing and product, and are sold on your company, they will spread the word virally.

Develop A Startup Story People, especially Americans, love stories of humble beginnings and creative vision. You may or may not fit this mold, but I bet you have a story to tell. Here are some ways to tell your story. Select the ones that are applicable to your situation. Craft a professional press release. Become a guest on a local radio show. Identify with charitable causes in your area. People like to believe they are spending their money with someone who cares for their community. Place your startup story on your website as a video interview. Write an article to submit to your local paper. Explain how many jobs you hope to create and the impact you hope to have on the community. Other ideas: _______________________________________________________________ What about your company or yourself is interesting and would make a good story? ______ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Your First Marketing Plan If we were honest, most of us would admit that we couldn’t have learned how to ride a bicycle without the use of training wheels. Yes, I’m talking about those goofy small wheels that sat just outside our back tires, which allowed our bicycle to keep from toppling over. Training wheels allowed us to gain confidence.

Your first marketing plan will be simple. That’s the way it should be.

Your first marketing plan will be simple. That’s the way it should be. Try to keep it that way because simple marketing is effective marketing. The more complicated it becomes, the more confused people will be about your business and products or services. Start by revisiting these questions. Your answers will help shape your marketing plan. 1. Who is my ideal customer? ___________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 2. What is the most cost-effective way to reach this ideal customer?___________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 3. What message will convert this ideal customer into a paying customer? ______________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 69


Use the dollar bill below to identify the percentage of your marketing budget that you plan to allot to each advertising type. Draw vertical lines through the dollar representing each portion. Label the portions appropriately.

The amount of money you have to budget for marketing will dictate whether you have a secondary campaign, perhaps featuring a TV commercial or another means to best reach your ideal customer.

Sales Process In Three Steps Assuming you have a product or service that you have been able to market well, you now must make the sale. The sale is when currency changes hands, and without it you have no business. The sales process can begin only after they know and like you. They know you through your marketing efforts and like you based on your marketing as well as your personal or staffâ&#x20AC;&#x2122;s personal qualities. Remember be 1 likable! communicate to a potential

> 3

offer to return payment if the customer is not satisfied

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>

2

give confidence that you can provide what the customer is seeking and remove risk

>

customer that your product/ service fills a need/desire


Identify how your product or service works within the sales process described above. ____ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ List some people with whom you can practice your sales process. ____________________ ______________________________________________________________________________ ______________________________________________________________________________

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7 - KNOW YOUR NUMBERS Starting a business requires a lot of attention to numbers. You might be using your own money to start your business. You might rely on loans and credit from others. Regardless, to be profitable, you need to think critically about your operating costs, pricing structure, and how much you require to meet your own personal expenses. This lesson will help you manage and protect your bottom line.

7

Know Your Operating Costs Lack of capital is the number one reason businesses fail. Therefore, you need to determine how much capital is required to operate your business. Use the following table to estimate your business expenses. EXPENSE

MONTHLY COST

Rent Office expenses Utilities Travel and vehicle expenses Advertising Insurance Personnel and personal salary Maintenance and repairs (trash removal, janitorial service, and lawn care) Inventory Taxes Debt Professional fees Other: Other: TOTAL

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What is your monthly operating budget? __________________________________________ From the list above, what are some expense you could eliminate, if necessary? _________ ______________________________________________________________________________ ______________________________________________________________________________

Reserves One of the best ways to build your business is to try to insulate it against the threat of destruction. In other words, you need to have enough cash on hand to cover any potential shortfalls in revenue. The reserve is there in the event of an emergency. It can be large or small at the outset, but it should be equal to your operating expenses for a projected period of interruption in which your business may be unable to generate new income. Based on your monthly operating budget (above), what is a healthy three-month reserve? ______________________________________________________________________________ Based on the amount of money you have on hand, how long could your business survive with no revenue? Six months or longer Three to six months One to three months Less than a month What is your emergency plan in the event everything that possibly could go wrong goes wrong? ______________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Credit Is Your Lifeblood Credit is the lifeblood of your business, as it keeps all the vital organs of your business functioning. If you are giving customers 30 days to pay their invoices, you will need credit to operate while waiting for these payments. What is your personal attitude toward credit? ______________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ How have you handled credit in your personal life? I donâ&#x20AC;&#x2122;t use credit Iâ&#x20AC;&#x2122;ve never had a problem I have had some issues in the past My personal credit is really messed up You need to realize the connection between the way you handle personal credit and the way you will handle business credit. Irresponsibility in one leads to irresponsibility in the other. What potential capital expenses are connected to your business? _____________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ In the event you needed to make a large capital purchase, how would you pay for it? ____ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Take A Modest Salary New business owners tend to pay themselves too much salary initially when their startup money is coming from someone else. Some experts suggest paying yourself whatever is left after all other expenses are paid. What annual salary do you need from your business? _______________________________ What adjustments can you make in your lifestyle so that you can reduce the amount of salary you need from the business? ______________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ The SBA offers some commonsensical advice on this issue: “If you are still in startup mode and have no profit history or aren’t turning a profit yet, you might want to set your salary by reviewing your own personal costs. What do you need to support your modest, startup lifestyle? Defer everything above and beyond that.”

Avoid Unnecessary Expenses I am not a big fan of starting a company without having some of your own money at risk. I think it helps to have a little “skin in the game.” As I suspect that you’ll manage your own money better than money from an outside source. Always think lean. Subject every prospective expense to the acid test. Is this outlay really needed to accomplish the goals I have for my company? Is it a vanity expense? Is this the best time to make this purchase? If I can’t defer it, how can I do it more cheaply? Take a close look at your startup expenses and identify those that are absolutely critical and those that are optional. Be honest about your need for the things on the list. Look for free or inexpensive ways to handle some expenses. Which of your startup expenses are optional? ______________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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What anticipated purchases can be delayed until your business becomes profitable? _____ ______________________________________________________________________________ ______________________________________________________________________________

Focus On Net Profit Your net profit is the number you want to keep track of. This could be called your business “batting average.” The easiest way to keep this number high is to keep your labor and fixed expenses low.

The easiest way to keep your net profit high is to keep your labor and fixed expenses low.

You want to guard your net profit and keep this percentage as high as possible. Gross profit is what you bring in before expenses (Gross profit = sales – cost of goods sold). If you aren’t making a net profit, your business is headed in the wrong direction. What do you estimate to be your net profit during your first year? _____________________ What do you estimate to be your net profit during your second year? __________________ Here is the basic way to find out your net profit: • Step 1: What are the total sales for your business? ________________________________ • Step 2: Add all other revenues received: _________________________________________ • Step 3: Subtract the amount of all of your business expenses _______________________ • Step 4: This is your net profit: __________________________________________________ You can reverse the process above to establish sales goals based on the desired net profit. Do you believe your business can meet your net profit expectations? __________________ Explain your response. _________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Guard Your Accounts Receivable Money people owe you isnâ&#x20AC;&#x2122;t income until you actually receive payment. Before starting your business, you must establish guidelines for customer payments. Allow as little time as possible between delivery of goods or services and receipt of payment. How long will you allow people to submit payment? _________________________________ What is your plan for pursuing payment from customers who are late? _________________ ______________________________________________________________________________ ______________________________________________________________________________

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8 - LEARN FROM EXPERIENCE The previous seven lessons have taught you about many of the ins and outs of starting a successful business. You now have the tools you need to move forward with more confidence and a plan in place for success. The final lesson offers additional advice to help you avoid some of the mistakes I made and obstacles I found in my twenty years of starting and owning businesses. You don’t have to make these same mistakes! Learn from others’ mistakes, as well as successes, by reading through the advice in this section.

8

Don’t Become Dependent Do not allow yourself to be too dependent on others. You must maintain control of your business and be aware of what is happening. Don’t let your business be hampered by the departure of an employee. As the owner, you must be willing and able to step in and fill the gap when needed. What information about your company do you need to receive daily? __________________ ______________________________________________________________________________ ______________________________________________________________________________ What information do you need monthly? ___________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What combinations, pass codes, passwords, etc. do you need to have full access to all vital information? ______________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Handle Terminations With Care If you have employees, you will have to terminate one eventually. You can minimize this by fully vetting people during the hiring process. However, there are going to be occasions when you understand that letting someone go is necessary. Apologies can make it look like you are uncertain of your decision. And finally you may regret it. Anything you say can be held against you if the employee applies for unemployment, sues, or badmouths you to your other employees. Before you begin the termination process, make sure you have documented the situation in the employee’s personnel record. Where can you find your state’s employment and termination laws? ___________________ _____________________________________________________________________________ You should have a termination checklist to make sure you follow the process according to the law. What steps to you plan to take before terminating an employee? ______________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Remember: • Do not delegate the terminating of an employee to someone who does not have the skill or temperament to do this. If it is a high level termination, it may be wise to have someone in the room that can document why the person was terminated. It also can keep the situation from being confrontational. • Know your state’s employment laws in regards to termination. You can do an Internet search to obtain these laws by typing your state followed by the words “employment laws.”

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The Customer Is Not Always Right The saying comes with good intentions, but when you agree that the customer is right, you inadvertently say… • My employees are wrong. • Dealing with bad customers is more valuable than protecting loyal employees. • I’m willing to do anything to earn a dollar. No business owner would ever say the things above, but catering to some customers sends messages you never intend to send. Describe the kind of customer you are willing to stop doing business with. ______________ ______________________________________________________________________________ ______________________________________________________________________________ How will you handle customers who are wrong? ____________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Dealing With Complaints Very few things can be more draining to a business owner than dealing with an upset customer. Your staff needs to know you are available to back them up or to step into a tense situation. Believe it or not, listening to an intelligent unsatisfied customer might help you to better run your business. Another benefit of dealing with complaints is that you can see weaknesses in your process or products that can be rectified. What can you learn from dissatisfied customers? ___________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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Describe a time when a complaint of yours was well-handled. ________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What did you learn from that experience? _________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Trades You can trade or barter your goods or services and save a lot of startup money. Trading your product and/or service in the beginning is a creative and effective way to save initial start-up cash. Trading, or bartering, as it is also known, is an exchange for service or products instead of a traditional cash transaction. If you plan to trade, you must know some key information: â&#x20AC;˘ The dollar value of the products/services you are trading. â&#x20AC;˘ The dollar value of the products/services you are receiving. â&#x20AC;˘ The IRS rules regarding reporting bartering. Yes, you have to tell them! What are some goods or services you might be able to trade? ________________________ ______________________________________________________________________________ ______________________________________________________________________________ Do not be embarrassed to ask to barter. Trading has been around a lot longer than our present form of currency. I have used this method more times than I can count for service, retail, and direct mail companies I have owned. For instance, if you are opening a restaurant, I am sure the painter or accountant would not mind half their fee in food. It never hurts to ask!

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Jealously Guard Your Time Becoming a business owner is exciting, but it will bring with it new demands on your time. In order to keep your business from infringing on your life and other responsibilities, you must set some time management boundaries. Take a look at the following grid and block out the times you are sleeping, spending time with family, handling other responsibilities, and so forth. The chart does not include overnight hours. time

Sunday

Monday

Tuesday

Wednesday

Thursday

Friday

Saturday

6am 7am 8am 9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm 6pm 7pm 8pm 9pm

Based on the chart on the previous page, how many hours do you expect to invest in your new business each week? ______________________________________________________ Allow your phone to go to voice mail and return calls when you have the time. Handle email a couple of times each day. If you present the illusion that you always are available, you will always be available.

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List some personal or family activities that take precedence over your business. _________ ______________________________________________________________________________ ______________________________________________________________________________ Create a list from the activities above and post it near your calendar. Make sure your employees know that you have outside commitments. However, if you are going to value your family life, be sure to encourage and enable your employees to do the same.

If you are going to value your family life, be sure to encourage and enable your employees to do the same.

Start Over Every Year Each year you need to set aside time to reflect and be deeply critical of your business. In the space below, list your first year goals. _________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ At the end of the first year, revisit this list and evaluate your business against the goals you established. Be willing to admit where you fell short and look for ways to improve in the coming year. Also, look closely at goals that were easily attained. Consider adjusting them for the coming year. After the first year, ask: • What products or services were not as profitable as anticipated? • If you could start over, which employees would you NOT hire? • Which employees are working at their full capacity? • Which employees need to be challenged or reassigned? 83


Dream Big, Think Big What would you do if your business exceeds your expectations? ______________________ ______________________________________________________________________________ ______________________________________________________________________________ What is your expansion plan? How do you intend to grow the business? _______________ ______________________________________________________________________________ ______________________________________________________________________________

Keep A Startup Journal You will learn a lot during your first year. There will be some mistakes you will never want to repeat. There will be some lessons you never want to forget. The best way to remember is to document what is happening. Writing down your thoughts and actions will be helpful in future business startups and give you fodder for conversations with other entrepreneurs. What is one quote that motivates you to pursue success in business and life? ___________ ______________________________________________________________________________ ______________________________________________________________________________ Be inspired every single day. Tell yourself in words and pictures what it is that you are meant to be.

To persist without exception means to ultimately ensure success in your endeavors. Author Andy Andrews

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A STEP-BY-STEP GUIDE TO YOUR NEW BUSINESS DREAM 8 Unbreakable Rules is the most practical start-up book I've ever read. What exactly are you waiting for, get started! John Jantsch, author of Duct Tape Marketing and The Referral Engine.

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SEAN C. CASTRINA is a serial entrepreneur having started over 15 successful companies over the last 20 years. He continues to add companies to his portfolio. Sean is also founder of newbizcoach.org an online source for equipping entrepreneurs for success. Sean is also a much sought after speaker and teacher on how to start and grow a successful small business.

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8 unbreakable rules for business